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| The Tax Publishers2020 TaxPub(DT) 3968 (Karn-HC) : (2020) 428 ITR 0245 : (2020) 275 TAXMAN 0206 INCOME TAX ACT, 1961
Section 263
Where expenditure incurred in foreign currency on travelling, professional charges and onsite service charges were for development of software at clients site outside India and assessee had neither rendered any technical services nor earned any receipt from rendering technical services, hence, there was no need to exclude the expenditure incurred in foreign currency from the export turnover, accordingly, view taken by AO was a plausible view and invocation of powers under section 263 could not be justified.
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Revision under section 263 - Erroneous and prejudicial order - Deduction under section 10A - Not excluding the expenditure incurred in foreign currency from export turnover for computing deduction
Assessee was engaged in the business of software development services and exports and claimed deduction under section 10A without excluding the expenditure incurred in the foreign currency from export turnover. AO without noticing the fact that assessee claimed deduction under section 10A without excluding the expenditure incurred in foreign currency from export turnover granted the deduction as claimed by the assessee. CIT on examination of the records in exercise of powers under section 263 noticed that assessee had claimed deduction under section 10A without producing the expenses incurred in foreign currency as required under Explanation 2 to section 10A and found that the order passed by AO was erroneous and prejudicial to the interest of revenue. Held: Assessee was engaged in the business of computer software development and services. Expenditure incurred in foreign currency on travelling, professional charges and onsite service charges were for development of software at clients site outside India, the assessee has neither rendered any technical services nor has earned any receipt from rendering technical services. Therefore, there was no need to exclude the expenditure incurred in foreign currency from the export turnover. Therefore, view taken by AO was a plausible view and invocation of powers in the fact situation of the case under section 263 could not have been held to be justified.
Followed:Changepond Technologies (P) Ltd. v. ACIT (2008) 22 SOT 220 (CHENNAI) : 2008 TaxPub(DT) 1651 (Chen-Trib) Patni Telecom (P) Ltd. v. ITO (2008) 22 SOT 26 (Hyd) : 2009 TaxPub(DT) 0258 (Hyd-Trib) Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 43 SC : 2000 TaxPub(DT) 1227 (SC)Relied:Ultratech Cement Ltd. & Ors. v. State of Rajasthan & Ors. [Civil Appeal No. 2773/2020 Decided On 17-7-2020] CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) Aztec Software Technology Ltd. v. CIT [ITA No.411/Bang/2011, dt. 22-2-2013]
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2005-06
IN THE KARNATAKA HIGH COURT
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